[Real Estate Investment] Last Large Volume Before Regulation... 'Hot Summer' Housing Market

From Next Month, Private Apartments Also Subject to Sale Price Ceiling

Pre-sale Transfer Restrictions Announced for Sale Rights in Seoul Metropolitan Area and Major Provincial Cities
Gyeonggi, Incheon, Daejeon, etc. Face Immediate Transfer Restrictions from the 19th

12000 Units in Dunchon Jugong and 70,000 Units in Seoul Metropolitan Area Alone
Over 100,000 Units Including Major Provincial Cities to Be Sold by August

Experts Say "Considering the Market, This Is an Opportunity for Genuine Buyers"

Last year, prospective buyers are listening to an agent's explanation while looking at a model at a sample house of an apartment in Seoul that was sold. (Photo by Lee Chunhee)

[Asia Economy Reporter Lee Chun-hee] This summer, large-scale dual regulations are anticipated. The government plans to implement the expansion of the private land price ceiling system scheduled for next month, while also enforcing restrictions on the resale of pre-sale rights in the metropolitan area and provincial metropolitan cities by August at the latest. In particular, areas newly designated as regulated zones through the June 17 real estate measures, such as Incheon and Gunpo, Ansan, Bucheon in Gyeonggi Province, will have resale restrictions starting from the 19th of this month. Demand from prospective buyers aiming to catch the last chance before regulations take effect and supply from construction companies are expected to coincide, leading to a large-scale pre-sale market opening in these areas in July and August.

First, from the 28th of next month, the price ceiling system will be expanded to apply to apartments on private land. The target areas include all 13 districts such as Gangnam, Seocho, and Songpa among the 25 autonomous districts in Seoul, parts of five districts including Seongbuk and Dongdaemun, and parts of Gwacheon, Gwangmyeong, and Hanam cities in Gyeonggi Province. Originally, the grace period was set to end on April 28, but due to difficulties faced by redevelopment sites in holding general meetings for project promotion amid the spread of COVID-19, the implementation date was postponed by three months.

The restriction on resale of pre-sale rights is also accelerating industry movements. As early as the end of next month, and no later than August, comprehensive resale restrictions on pre-sale rights will be enforced in the metropolitan area and provincial metropolitan cities. In the metropolitan area’s overconcentration control zones and growth management zones, as well as urban areas of provincial metropolitan cities, resale of pre-sale rights will be completely prohibited until ownership transfer registration. Especially, most areas in Gyeonggi Province and Incheon (excluding Ganghwa and Ongjin), and Daejeon, newly included in regulated zones through the measures announced on the 17th, will be subject to resale restrictions starting from the 19th.

Therefore, not only this month but also July, which has traditionally been an off-season, will see a flood of new pre-sale supply aimed at avoiding regulations. According to Real Estate 114, the total pre-sale supply scheduled in the metropolitan area and provincial metropolitan cities until August is 101,456 households. Of these, 70,634 households will be supplied in the metropolitan area alone.

The most attention-grabbing site is undoubtedly the Dunchon-dong Jugong Apartment reconstruction in Gangdong-gu, Seoul. It is a mammoth complex with a total of 12,032 households. Four major construction companies?Hyundai Engineering & Construction, Daewoo Engineering & Construction, HDC Hyundai Development Company, and Lotte Construction?are participating as a consortium in the construction. The general pre-sale supply excluding union member units reaches a whopping 4,786 households. However, whether the pre-sale can be successfully conducted on time remains uncertain. The general pre-sale price is expected to be set at around 29 million KRW per 3.3㎡, causing friction with the Housing & Urban Guarantee Corporation (HUG). Nonetheless, due to the significant financial burden of delaying pre-sale, it is widely expected that the pre-sale will proceed before the price ceiling system is implemented.

In Eunpyeong-gu in the northwest of Seoul, redevelopment supply is pouring out. A total of 4,745 households from Susaek 6 (1,223 households), Susaek 7 (672 households), Susaek 13 district (1,464 households), and Jeungsan 2 district (1,386 households) are planned for pre-sale in July. Additionally, ‘Raemian Elinity’ in Dongdaemun-gu (1,048 households) and Cheonho 1 district in Gangdong-gu (999 households) will also launch their last pre-sale before the price ceiling system.

In Gyeonggi and Incheon areas, ‘Sanseong Station Xi Prugio’ in Seongnam-si (4,774 households), ‘Suwon Central I-Park Xi’ in Suwon-si (3,432 households), ‘Osan Lotte Castle Sky Park’ in Osan-si (2,339 households), and ‘Juan Park Xi The Platinum’ in Michuhol-gu, Incheon (2,054 households), as well as ‘Gajaeul Station Truel Eco City’ in Seo-gu (1,218 households) will proceed with pre-sale before regulations take effect.

In the provinces, large-scale supply continues in Busan. As it escaped regulation under the June 17 measures, demand is more concentrated in this area. The ‘Raemian Ray County’ redevelopment project in Geoje 2 district, Yeonje-gu, Busan, scheduled for July, is representative. It consists of 4,470 households, with more than half?2,759 households?being general pre-sale units. This month, Daeyeon Beach reconstruction (1,374 households) and Daeyeon 4 redevelopment (998 households) in Nam-gu, and Busan North Port redevelopment D3 district (872 households) in Dong-gu will launch pre-sale.

Elsewhere, new apartments are seeking homebuyers in various provincial metropolitan cities, including ‘Seodaegu Station Bando Yubora Centum’ in Seo-gu, Daegu (1,678 households), ‘Bangnim-dong Gold Class’ in Nam-gu, Gwangju (420 households), and mixed-use residential complex in Gayang-dong, Dong-gu, Daejeon (360 households).

Lim Byung-chul, senior researcher at Real Estate 114, analyzed, “Although resale restrictions impose some limitations on transactions, considering the simultaneous expansion of the price ceiling system and the recent subscription market conditions, speculative demand is expected to decrease, providing another opportunity for genuine buyers. It will be important to wisely decide the subscription timing by weighing the pros and cons.”